Register of Overseas Entities: How does it affect you?

On 15 March 2022, the Economic Crime (Transparency and Enforcement) Act 2022 (the ECA) received Royal Assent and has since come into force, on 5 September 2022. One of the creations of the ECA was the Register of Overseas Entities (the Register) and this article focuses on this particular part of the new legislation.

In short, the Register prevents non – UK companies, trusts and partnerships, or other legal entity, from dealing with UK property unless information on who owns and controls it has been disclosed to Companies House and noted on the Register – Companies House will administer this new Register and pass on information to HM Land Registry. The Register will contain key information such as the name of the overseas entity, their country of incorporation, the name, address of their beneficial owners and when their interest began.

Who is caught?

Overseas entities who own a ‘Qualifying Estate’ since 1 January 1999 will be caught unless exempt under the Act – a qualifying estate is described as a freehold interest, or a lease granted for 7 year or more. The Act also catches any future purchases of freehold and leasehold interests.

When do I have to comply?

Now; but there is a transitional period ending on 31 January 2023. Overseas entities who own, or intend to own, a Qualifying Estate will have to submit the relevant information to Companies House by the end of the transitional period. There will be criminal penalties for failing to register (punishable by a fine or imprisonment or both). It remains to be seen how strictly the government will enforce breaches of the Act but the necessary bite is built into it.

What does this mean in practice?

Overseas entities will be prevented from dealing with their interests in land, such as selling or buying freehold or leasehold interests, or granting or taking on leases of 7 years or more, for example, if they haven’t registered. Throughout the transitional period, the Land Registry will be putting restrictions on Qualifying Estates owned by non-UK entities and so your property may already be subject to a restriction. Unless the Land Registry have been notified that an entry on the register has been made (or that an exemption applies), any dealing will be prevented.

Next steps

Officers of overseas entities with interests in UK property will need to make sure they are entered on the Register by 31 January 2023, or exempt, to avoid any fines or prison (although one would have thought the latter only likely in extreme cases). Lenders will also need to make sure any borrowers are registered, to avoid any issues with enforcement of their security. If you would like to know more, please contact the Commercial Real Estate Team.